MONTPELIER (VT)
Associated Press [New York NY]
September 30, 2025
By Kevin O'Connor/VTDigger
A year after seeking to reorganize its depleting finances in U.S. Bankruptcy Court, the Vermont Roman Catholic Diocese is struggling to cover about $1.5 million and counting in related legal bills.
Under federal law, an institution requesting Chapter 11 protection must pay attorney fees not only for itself but also for officially recognized creditors — which, in the diocese’s case, includes more than 100 claimants alleging sexual abuse by clergy.
The state’s largest religious denomination filed for bankruptcy on Sept. 30, 2024, after a series of misconduct settlements reduced its assets by half, to about $35 million. Since then, the diocese has spent almost 5% of its remaining money on legal bills, forcing it to cut the workweek for staff at its South Burlington headquarters to 30 hours.
“We also have encouraged employees to seek other possible employment opportunities because we cannot guarantee any position at this time,” Vermont Catholic Bishop John McDermott wrote in a letter to parishioners.
The church and creditors are aiming to mediate a preliminary plan by Dec. 31. But the diocese already “has exhausted its unrestricted investments” and is paying for its operating expenses and bankruptcy case with the $3 million gleaned each year from an annual bishop’s appeal and a tax on the income of its 63 parishes, McDermott wrote.
The diocese has paid $582,932 for its bankruptcy lawyers as of Aug. 31, court records show. The Minnesota-based firm of Fredrikson & Byron, which specializes in business law, has received $491,999. As local support, Burlington’s Dinse firm has received $47,369 and Bethel lawyer Raymond Obuchowski has received $43,563.
The church has paid out even more — a total of $843,089 as of July 31 — for the legal fees of three groups who represent abuse claimants and their Official Committee of Unsecured Creditors. The national law firm of Pachulski Stang Ziehl & Jones has received $564,670, the California-based Berkeley Research Group has received $257,140 and the New York state law firm of Lemery Greisler has received $21,278, records show.
When filing for bankruptcy a year ago, the church said it had no choice in joining 40 other U.S. Catholic entities who’ve sought Chapter 11 protection. The Vermont diocese had paid $34.5 million to settle 67 clergy misconduct lawsuits yet still faces 118 more claims dating as far back as 1950.
Going to court hasn’t been cheap. As the church’s chief counsel, Fredrikson & Byron is charging $235 an hour for a paralegal, $485 an hour for an associate and between $565 and $975 an hour for a lawyer, records show.
Pachulski Stang Ziehl & Jones, acting as lead attorneys for the creditors committee, usually charges as much as $2,250 an hour for a lawyer, but “for the entirety of 2025, the firm will continue to cap its rate for attorneys working on the case at $950 per hour,” a court filing stated.
Vermont Bankruptcy Court Judge Heather Cooper, who must approve all legal fees, has tried to cut costs. She asked the creditors’ counsel to reduce its first quarter expenses by $4,208 after noticing the firm had incorrectly sought compensation for its online legal research platform.
But all involved know legal bills can add up. In an extreme example, the Roman Catholic Diocese of Rockville Centre on Long Island, New York, reported $70 million in attorney fees over four years before reaching a record $323 million bankruptcy court settlement last December.
Under the Chapter 11 process, the Vermont church must present the court with a tally of its assets and liabilities. A judge then will decide whether to allow it to develop a reorganization plan that would require approval from both the court and creditors.
Vermont abuse claimants are seeking church records detailing the diocese’s assets, including a reported $35 million tied to its headquarters and state-level holdings, and all local operations it oversees, starting with 63 parishes with an estimated collective worth of $500 million. The findings are expected to spark future court debate on which assets can be used to compensate creditors.
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This story was originally published by VTDigger and distributed through a partnership with The Associated Press.